SP Session1

Strategic Planning
Spring 1385-86
Dr. Mehran Sepehri

Dr. Ali Kermanshah
Graduate School of Management
Strategic Planning MBA Sharif Dr. Sepehri Spring 1385
Session 1 Saturday 14th Bahman 85

Strategic Planning Fundamentals
Definitions, Terms, and Terminology
Overview of Concepts and Importance
Chapter 1
Strategic Management: Concepts & Cases

11th Edition, Fred David, Prentice Hall, 2006
The Nature of Strategic Management
What Is Strategy and

Why Is It Important?
What goes into Strategy?
Session 1 -2
About the Author:
Fred R.. David, Ph.D.
Fred R. David, Ph.D. is an

internationally recognized
strategic planning scholar,
author, and consultant
He received a BS and MBA degree
from Wake Forest University and a
Ph.D. in strategic management from
the University of South Carolina. He is
the Tran-South Professor of Strategic
Management at Francis Marion
University in Florence, South Carolina.
His Strategic Management textbook,
is used in more than 400 colleges and
universities to teach strategic
planning. The textbook is very
practitioner and skills-oriented.
This book has been translated into
Farsi, Spanish, German, Japanese
and Chinese and is widely used
worldwide.
Session 1 -3
Themes in 11th ed. of the Text

Global Considerations
impact virtually all strategic decisions
E-commerce
vital strategic management tool
Natural environment
important strategic issue
Why Strategic Management Is a Process?
Who Performs the Tasks of Strategy?
Benefits of Managing Strategically?
Terms to Remember!
Session 1 -4
Power of Saying No!
Case of Start-up company

Excellent at Operations
Trying to please everyone
Doing a bit of everything
Working harder, not smarter
Not growing, little profit

No focus, no direction
Losing to specialty stores
Session 1 -5
Prime Task of
Strategic Management
Peter Drucker: -- Think through the

overall mission of a business. Ask
the key question: What is our
Business?
Session 1 -6
Session 1 -7
Thinking Strategically:
The Three Big Strategic Questions
1. Where are we now?
2. Where do we want to go?
Business(es) to be in and market positions to stake out
Buyer needs and groups to serve
Outcomes to achieve
3. How will we get there?
A companys answer to how

will we get there? is its strategy
Session 1 -8
Defined
Art & science of formulating,
implementing, and evaluating,
cross-functional decisions that
enable an organization to achieve
its objectives
Session 1 -9
Session 1 -10
In essence, the strategic plan is a

companys game plan
It is fundamental planning, away from

daily operations to bring focus & direction
Session 1 -11
achieves a firms success
through integration
Management
Marketing
Finance/Accounting
Production/Operations
Research & Development
MIS
Session 1 -12
What Is Strategy?
Consists of the combination of competitive

moves and business approaches used by
managers to run the company
Managements game plan to
Attract and please customers
Stake out a market position
Compete successfully
Grow the business
Achieve targeted objectives
Session 1 -13
The Hows That

Define a Firm's Strategy
How to please customers
How to respond to changing

market conditions
How to outcompete rivals
How to grow the business
How to manage each functional piece of the

business and develop needed organizational
capabilities
How to achieve strategic and financial objectives
Strategy
is HOW
to . . .
Session 1 -14
The What of a Companys Strategy
Session 1 -15
Session 1 -16
Strategy Formulation
Vision & Mission
External Opportunities & Threats
Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies
Strategy Selection
Session 1 -17
Issues in Strategy
Formulation
9New
9Newbusiness
business
opportunities
opportunities
9Businesses
9Businessesto
toabandon
abandon
9Allocation
9Allocationof
ofresources
resources
9Expansion
9Expansionor
or
diversification
diversification
9International
9Internationalmarkets
markets
9Mergers
9Mergersor
orjoint
jointventures
ventures
9Avoidance
9Avoidanceof
ofhostile
hostile
takeover
takeover
Session 1 -18
Strategy Implementation
Annual Objectives
Policies
Employee Motivation
Resource Allocation
Session 1 -19
Strategy
Implementation
Action
ActionStage
Stageof
ofStrategic
Strategic
Management
Management
9Most
9Mostdifficult
difficultstage
stage
9Mobilization
9Mobilizationof
ofemployees
employees
&&managers
managers
9Interpersonal
9Interpersonalskills
skills
critical
critical
9Consensus
9Consensuson
ongoal
goal
pursuit
pursuit
Session 1 -20
Strategy Evaluation
Internal Review
External Review
Performance Metrics
Corrective Actions
Session 1 -21
Strategy
Evaluation
Final
FinalStage
Stageof
ofStrategic
Strategic
Management
Management
9Subject
9Subjectto
tofuture
future
modification
modification
9Todays
9Todayssuccess
successno
no
guarantee
guaranteeof
offuture
futuresuccess
success
9New
9New&&different
differentproblems
problems
9Complacency
9Complacencyleads
leadsto
to
demise
demise
Session 1 -22
Tasks of Strategic Management

Task 1
Develop a
Strategic
Vision
& Mission
Revise as
Needed
Task 2
Task 3
Task 4
Task 5
Set
Objectives
Craft a
Strategy
to Achieve
Objectives
Implement
& Execute
Strategy
Evaluate &
Make
Corrections
Revise as
Needed
Improve/
Change
Improve/
Change
Recycle
as Needed
Session 1 -23
Developing a Vision and Mission

The First Task of Strategic Management
Begins with thinking strategically about

The firms future business makeup
Where to take the firm
The task is to
Create a roadmap of a companys future
Decide what future business position to stake out
Provide long-term direction
Give the firm a strong identity
Session 1 -24
Missions vs. Strategic Visions

A
mission
statement focuses
on current
business activities
Business(es)
company is in now
Customer needs
currently being
served
strategic vision
concerns a firms
future business
path
The
kind of company
it is trying to become
Customer needs to
be satisfied in the
future
Session 1 -25
Competitive Advantage
Strategic Management is Gaining &
Maintaining Competitive Advantage
Anything that a firm does especially
well compared to rival firms
Session 1 -26
Achieving Sustained
Competitive Advantage
1. Adapting to change in external trends,
internal capabilities and resources
2. Effectively formulating, implementing &

evaluating strategies
Session 1 -27
Integrating Intuition and

Analysis
The strategic management process

attempts to organize quantitative and
qualitative information under conditions
of uncertainty
Session 1 -28
Integrating Intuition and

Analysis
Intuition is based on:
Past experiences
Judgment
Feelings
Intuition is useful for decision making in:

Conditions of great uncertainty
Conditions with little precedent
Session 1 -29
Integrating Intuition & Analysis
Intuition & Judgment
Analytical Thinking
Involve Management at all levels
Influence all Analyses
Intuitive Thinking
Session 1 -30
Adapting to Change
Organizations must monitor events

On-going process
Internal and external events
Timely changes
Effective Adaptation
Requires long-term focus
Session 1 -31
Adapting to Change
Rate & magnitude of change
increasing dramatically
E-commerce
Demographics
Technology
Session 1 -32
Adapting to Change Key

Questions
What kind of business should

we become?
Are we in the right fields
Are there new competitors?
What strategies should we
pursue?
How are our customers
changing?
Session 1 -33
Key Terms
Strategists Firms success/failure
Various Job Titles:
Chief Executive Officer (CEO)
Chief Strategy Officer (CSO)
President
Owner
Board Chair
Executive Director
Session 1 -34
Key Terms
Vision Statement
What do we want to become?
Mission Statement
What is our business?
Session 1 -35
Key Terms
Opportunities and Threats (External)
Largely beyond the control of a single

organization
Session 1 -36
Key Terms
Opportunities & Threats (External)
Analysis of Trends:
Economic
Social
Cultural
Demographic/Environmental
Political, Legal, Governmental
Technological
Competitors
Session 1 -37
Key Terms
Opportunities & Threats
Environmental Scanning (Industry Analysis)
Process of conducting research and

gathering and assimilating external
information
Session 1 -38
Key Terms
Opportunities & Threats
Basic Tenet of Strategic Management
Take
Takeadvantage
advantageof
of
External
ExternalOpportunities
Opportunities
Strategy Formulation
Avoid/minimize
Avoid/minimizeimpact
impactof
of
External
ExternalThreats
Threats
Session 1 -39
Key Terms
Strengths & Weaknesses (Internal)
Controllable activities performed especially

well or poorly
Session 1 -40
Key Terms
Strengths & Weaknesses (Internal)
Typically located in functional areas of the firm
Management
Marketing
Finance/Accounting
Production/Operations
Research & Development
Computer Information Systems
Session 1 -41
Key Terms
Strengths & Weaknesses
Assessing the Internal Environment
Financial Ratios
Performance Metrics
Internal Factors
Industry Averages
Survey Data
Session 1 -42
Key Terms
Long-term Objectives
Mission-driven pursuit of specified results

more than one year out
Session 1 -43
Key Terms
Long-term Objectives
Essential for ensuring the firms success
Provide direction
Aid in evaluation
Create synergy
Focus coordination
Basis for planning, motivating, and

controlling
Session 1 -44
Key Terms
Strategies
Means by which long-term objectives are

achieved
Session 1 -45
Key Terms
Strategies
Some Examples
Geographic expansion
Diversification
Acquisition
Market penetration
Retrenchment
Liquidation
Joint venture
Session 1 -46
Key Terms
Annual Objectives
Short-term milestones that firms must

achieve to attain long-term objectives
Session 1 -47
Key Terms
Policies
Means by which annual objectives will be

achieved
Session 1 -48
Example Strategies in Action in 2005
Session 1 -49
Example Strategies in Action in 2005
Session 1 -50
Comprehensive strategic management model

External
Audit
Chapter 3
Vision
&
Mission
Long-Term
Objectives
Generate,
Evaluate,
Select
Strategies
Implement
Strategies:
Mgmt Issues
Implement
Strategies:
Marketing,
Fin/Acct,
R&D, CIS
Measure &
Evaluate
Performance
Chapter 2
Chapter 5
Chapter 6
Chapter 7
Chapter 8
Chapter 9
Internal
Audit
Chapter 4
Session 1 -51
Strategic Management Model
Strategic Management Process
Dynamic & Continuous

More formal in larger organizations
Session 1 -52

1. Identify Existing -
Vision
Mission
Objectives
Strategies
Session 1 -53

2.
3.
4.
5.
6.
7.
Audit external environment

Audit internal environment
Establish long-term objectives
Generate, evaluate & select
strategies
Implement selected strategies
Measure & evaluate performance
Session 1 -54
Benefits of Strategic
Management
Proactive in shaping firms future
Initiate and influence firms activities

Formulate better strategies
Systematic, logical, rational
Session 1 -55
Management
Financial Benefits
Improvement in sales
Improvement in profitability
Productivity improvement
Session 1 -56
Management
Non-Financial Benefits
Improved understanding of competitors strategies
Enhanced awareness of threats
Reduced resistance to change
Enhanced problem-prevention capabilities
Session 1 -57
Management (Greenley)
1. Identification of Opportunities
2. Objective view of management problems
3. Improved coordination & control
4. Minimizes adverse conditions & changes
5. Decisions that better support objectives
Session 1 -58
Management (Greenley contd)
6. Effective allocation of time & resources
7. Internal communication among personnel
8. Integration of individual behaviors
9. Clarify individual responsibilities
10. Encourage forward thinking
Session 1 -59
Management (Greenley contd)
11. Encourages
favorable attitude toward
change
12. Provides
discipline and formality to the

management of the business
Session 1 -60
Why Some Firms Do No

Strategic Planning
Poor reward structures
Fire-fighting
Waste of time
Too expensive
Laziness
Content with success
Session 1 -61
Why Some Firms Do No

Strategic Planning
Fear of failure
Overconfidence
Prior bad experience
Self-interest
Fear of the unknown
Suspicion
Session 1 -62
Business Ethics & Strategic

Management
Business Ethics defined
Principles of conduct within organizations

that guide decision making and behavior
Session 1 -63

Management
Good business ethics
Prerequisite for good strategic management
Session 1 -64

Management
Code of business ethics
Provides basis on which policies can be

devised to guide daily behavior and
decisions in the workplace
Session 1 -65

Management
Business practices always considered unethical
Misleading advertising
Misleading labeling
Harm to the environment
Insider trading
Dumping flawed products on foreign markets
Poor product or service safety
Padding expense accounts
Session 1 -66
Natural Environment
Perspective
ISO used to gain strategic advantage
ISO 9000 focuses on quality control

> 1.5 million companies incorporate ISO
Session 1 -67
Natural Environment
Perspective
ISO 14000 standards
Voluntary standards
ISO 14001 standard for Environmental
Management System
Firms minimize harmful effects on
environment
Session 1 -68
The Nature of Global

Competition
International/multinational corporations
Parent company
Host country
Session 1 -69
The Nature of Global

Competition
Strategy implementation may be difficult
Cultural differences
Norms
Values
Work ethic
Session 1 -70
Advantages of International
Operations
Absorb excess capacity
Reduce unit costs
Spread risk over wider markets
Low-cost production facilities
Less intense competition
Lower taxes
Economies of scale
Session 1 -71
Disadvantages of International
Operations
Difficult communications
Underestimate foreign competition
Cultural barriers to effective management
Complications arising from currency
differences
Session 1 -72

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Strategic Planning

Dr. Mehran Sepehri

Session 1 Saturday 14th Bahman 85

Strategic Management: Concepts & Cases

The Nature of Strategic Management

What Is Strategy and

About the Author:

Fred R.. David, Ph.D.

Fred R. David, Ph.D. is an

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Themes in 11th ed. of the Text

Power of Saying No!

Case of Start-up company

Not growing, little profit

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Peter Drucker: -- Think through the

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Business(es) to be in and market positions to stake out

Buyer needs and groups to serve

3. How will we get there?

A companys answer to how

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

In essence, the strategic plan is a

It is fundamental planning, away from

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Research & Development

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Consists of the combination of competitive

Managements game plan to

Attract and please customers

Stake out a market position

Grow the business

Achieve targeted objectives

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

The Hows That

How to please customers

How to respond to changing

How to outcompete rivals

How to grow the business

How to manage each functional piece of the

How to achieve strategic and financial objectives

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

The What of a Companys Strategy

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Tasks of Strategic Management

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Developing a Vision and Mission

Begins with thinking strategically about

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Missions vs. Strategic Visions

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385

2. Effectively formulating, implementing &

Strategic Planning MBA Sharif Dr. Sepehri Spring 1385